India: a pivotal role in achieving the SDGs
Home to nearly 1.4 billion people and the world’s largest democracy, India has enormous potential as a marketplace for entrepreneurs. It is a country bursting with opportunities, optimism and innovation.
The last two decades have seen its emergence as a global player and the reduction of extreme poverty in many regions. Whether or not it can achieve sustainable progress on these fronts will have profound implications for the whole planet.
Key role in global prosperity
In 2019, we invested over €319 million in India, totaling an €839 million portfolio via companies spread across our three main sectors, but anticipate that through strategic investments this figure will rise over the next four years to €1 billion.
We recognize that India’s success is pivotal to the achievement not just of its own mission, but of the SDGs as a whole. The world will find it very challenging to reach its targets in terms of reducing inequality, stimulating financial inclusion or closing the gender gap if India does not manage to lift its citizens above the poverty line and offer them sustainable economic opportunities.
On-the-ground impact
Since 2012, we have made over 60 direct investments across India. From microfinance institutions to wind farms, water management to agricultural systems, each one of these projects has been designed to drive sustainable economic growth and inclusion.
In 2019, we invested in Aye Finance, a non-deposit taking Non-Banking Financial Institution with a specific focus on micro and small enterprises. Our facility supports the expansion of Aye Finance’s portfolio to female micro-entrepreneurs in different regions of India. Additionally, Aye Finance is receiving support from our Capacity Development Program, helping to identify the most effective ways to reach this market.
Furthermore, this year we provided also financial support to Sahyadri Farmers Producer Co., a farmer-owned producing organisation that procures, processes and markets fruits & vegetables from 7,000 small and marginal farmers. The farmers benefit from economies of scale, technology-driven enhancements, product marketing, adequate production and processing facilities, resulting in their comprehensive integration in the value chain with the potential to obtain higher returns.
In December 2019, we signed an agreement with National Collateral Management Limited (NCML), an agricultural-commodities storage company headquartered in Gurgaon, India. We subscribed to a 10-year non-convertible debenture of an equivalent amount of US$45 million in INR issued by NCML. The funding is being used to finance the construction of steel silos with a capacity of 800 million metric tons for the storage and preservation of staple foods which will help to secure food for the Indian food security system and decrease food-wasting as much as 30%. The government of India will distribute this food to consumers living below the poverty line so that they can purchase these staple food grains at affordable prices.
As well as investing in companies directly, some 60% of our investments are currently in private equity funds that invest in themes aligned with our strategy. In 2007, we invested for the first time in a fund of Aavishkaar, now the only diversified impact investing platform of its kind in India. Since then we have provided capital to support them in building scalable enterprises and creating nurturing ecosystems for start-up companies in India as well as emerging Asia and sub-Saharan Africa.
Another example is InCred, a new-age financial services platform that leverages technology and data-science to make lending quick and easy. InCred directly funds schools in India and students that want to study abroad but require additional financial support to do so.
We are now looking to increase our direct investments to have more leverage within companies, and so maximize the impact and focus of our investments.
Long-term commitment
As elsewhere, FMO strives to ensure its investments in India add value in more ways than one. With each investment comes a commitment to learning from the project's successes and setbacks, to build partnerships that can generate new opportunities, and to unlock any potential to scale success stories.